HOW MUCH IS TOO MUCH WHEN MAKING REFERRALS?

Aaron. I don't believe your buyers will be too happy when you disclose to them that "By the way, the lender that I am referring you to will pay me $XX for referring you".

Makes the home buyer just so much meat.  It also invites RESPA.  That referral fee had better be disclosed.  I believe I would skip the Weds meeting.  Who knows what that loan officer will do for a few bucks in terms of lender fees, points, etc.  Not someone I want to do business with.

Brian.  Thanks for commenting.  That was one of the points of my post.  The referring agent's interest was limited to the referral fee.

Annette.  I agree with your math and your rationale for paying 50%.  New agents need experience.  I'd do the same thing and probably did.  It was so long ago, I can't remember. 

Brad.  The buyer had to be in a higher than $600K price range because of the location and the desired acreage.  But, that doesn't matter to me.  I believe that 50% is gouging.  In fact, the type of property that the buyer wanted would be a work intensive, RISK INTENSIVE property. 

Faina.  The agent in Florida probably assumed that lead acquisition is hard here and I'd jump at her referral.  Lead acquisition is not hard for me.  I generate way more business than I can handle and always have.  When your business grows, you'll feel the same way I do. 
 
Jennifer.  THAT ASTOUNDS ME.  How dare they tell you what to do with your income.  Like you said, how much of their income are THEY giving to charity.  Guess I'd pass on that one too. 

Corina.  You are SO right.  The comments are as good, if not better than the posts.  You know you've posted something worthwhile when the comments are more than
"great post".

Catherine.  That's funny.  Perhaps the "difficult" one is the agent making the referral.

Kelley.  25% is what a lot of agents ask for.  I think it's high for moderate priced properties.  I'm more comfortable with less.  I charge 10% for properties under $200K and 20% for properties $200K and over.  Once the referral fee is paid off the top, the agent then often has a broker split.  I want the agent doing the work to have incentive to give my referral a lot of attention.

Jim.  Oh gee! ! !   I want to do that.  Hang up on a greedy agent.  What fun that must have been.  I've got an an agent team in Harford County MD that still owes me $1800 for a referral where they paid me 10% rather than 20%.  Needless to say, they don't get any more referrals from me.  What was so funny was that, when they were caught, the wife, called me and started to curse at me.  Like I'd done something wrong.  Talk about shooting yourself in the foot.  They promised they'd make it up on the next sale.  They didn't.  Greed, greed, greed.  By their own admission, my referrals accounted for 1/3 of their business in 2006. 

Brad.  The property this buyer wanted was a house with acreage, 10 acres or more.  Properties with with acreage are risk intensive because of the survey, well, septic, tax matters, inspections, etc.  They are a lot more complicated than a house in town in a subdivision. 

Jim.  I try my best to develop relationships with small independent brokers.  They are, in my experience, more likely to make sure I get paid. 

This is one issue that should NEVER be a problem.  It's enough to make one lose trust in our brethren.

Yeah, I'm laughing out loud. 

Christina and Kevin.

I think you're new to ActiveRain and welcome.  Please remove the links from your comment or I'll have to delete your comment. 

The agent asked for 25% referral fee or 50% if she found the listings to show.  I have a very successful brokerage.  I don't have to pay for leads at all.  Our of the county in which I live, my network of agents and brokers do the selling.  In Lovettsville, I do the selling.  I'm the most experienced agent/broker in the county but the agent didn't even inquire about that.  It appears that she would refer to anyone who would pay her 50% for showing home listing she sent to me.  What a crock. 

Only a hungry, inexperienced agent with no business would take that referral. 

Once that buyer gets to Virginia, they are MY CLIENT, no the referring agent in Florida.  That means I have the responsibility and risk.  I'm not going to pay 50, 35 or 25% for taking the kind of risk involved in selling homes with acreage in Virginia. 

Thanks for commenting.  Please remove the links from your comment. 

Dominick.  Thanks very much for commenting. 

I don't know what the standard is.  I hope agents are not trying to implement any kind of "standard" because that would violate the anti-trust laws that DOJ is dogging us about. 

I don't know what the average fee is.  I know that I set broker policy in my brokerage and I charge 10 or 20% when I make a referral and I don't pay more than 20% when I take one and I'm very particular about what I take.

When I e-mailed the agent asking what her fee was, if she had simply said 25%, I'd have told her that I would be happy to help her buyer referral but I only pay 20%.  Then she could have taken it or not.  But, she threw in that klinker about 50% if she finds the property.  She's in Florida for goodness sake. 

I believe that she thought she'd get an anxious agent because the house they are interested in is priced at just under $700k.  She's in Florida and perhaps in an area where prices are low.  $700K is not a high priced property in my area.  I've got 5 under contract now and only one is under $700K at $640,000.

Thanks for not linking Tony. 

I don't know what I can say about your web site.  You've got a PR4 and that's pretty good.  You rank #7 for "Denver buyers agent", which is good. 

But the rank for "Denver real estate" or "Denver homes for sale" is not so good. 

The site is a bit of a laundry list, but shuck, Google doesn't care.  It's what attracts buyers to contact you that counts.  On your page, the buyer has to get to the bottom of the page to get an e-mail link. 

I suspect that having that e-mail address public must bring a lot of spam too.  Or, maybe not.

Good luck

Tony.

I suspect that the meta title and description tage are not helping. 

<head>
<title>Denver Real Estate Referral Agent Agreement</title>
<!-- slideshow scriptage -->

I'm no expert, but a site has to produce for, maybe "denver real estate agent" and it really doesn't.

Keyword: denver real estate agents URL Pattern: tonymassey.com/referrals

Querying Google. Please be patient...

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Number of Backlinks: 0   (Check GoogleTM)

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Number of Backlinks: 0   (Check GoogleTM)

Christina and Kevin.  Since you choose not to remove the links, I just deleted the comment. 

Anyone can link on ActiveRain posts as much as they wish, on your own blog and posts on your own blog.  Linking in comments on someone else's blog is not generally done because it's a way of hijacking someone eles's blog for links to your own web sites or posts.

Cendant is not a model I would wish to follow.  They are infamous for "after the fact" referral attempts, now against the law in some states. 

I don't really care what other agents or brokers charge or pay.  I think referral fees are too high and I just don't pay over 20% and that is only for a well qualified buyer in a price range of more than $400K.  I prefer to keep my time open for buyers that don't have another agent involved.  So, when the fee gets over 20%, the incentive for me to spend my time with the buyer is gone.  I make more money managing web site traffic than working with low priced buyers or buyers with a referral fee attached.  Just no incentive.